21 February 2014

America’s Philanthropic Spirit Thrives on Freedom, Not Mandates

The Philanthropy Roundtable is deeply concerned about recent remarks made by Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, before a leading regional association of grantmakers:

“It should be no secret to anyone on this webinar today that private philanthropy isn’t all that private anymore. To the extent that those that don’t work in our sector think about foundations at all, many of them feel as though foundations are just a bunch of rich folks with special tax privileges who don’t want to help people who need it most. Members of Congress are paying attention to foundations and asking more questions than they used to. The Senate Finance Committee is considering fundamental tax reform and is asking every industry that gets preferential tax treatment to justify itself. State legislatures and attorneys general…are looking more closely at charities and foundations…And so the public and many lawmakers want to have a say in private philanthropy… We’re going to explore what foundations can do to improve how they operate…”

Dorfman went on to describe NCRP’s recommendations for good practice in philanthropy, as outlined in its voluntary initiative “Philanthropy’s Promise”:

  • At least 50 percent of grantmaking explicitly benefits at least one underserved community
  • At least 25 percent of grantmaking explicitly supports nonprofit advocacy, community organizing and civic engagement

This is a narrow “one-size-fits-all” definition of excellence. Many of the historic achievements of philanthropy—from medical research, to the arts, to environmental protection, to religious education, to the support of private and public universities, to Andrew Carnegie’s construction of public libraries—would fail to meet NCRP’s criteria. One of the greatest achievements of grantmaking in the last decade—networks of charter schools where low-income children excel academically—doesn’t meet NCRP standards for advocacy.

But what disturbs us most about Dorfman’s statement is his hint that coercive government action is likely unless philanthropists follow NCRP’s recommendations. He and his colleagues at NCRP are dangerously close to calling for regulations and legislation that would mandate how and to whom donors may give.

Philanthropy can benefit from vigorous debate about standards of excellence in grantmaking. The Philanthropy Roundtable respects the right of activist groups from across the political spectrum to make recommendations about philanthropy, to encourage funders to adopt these standards, and to analyze and criticize the giving of foundations that fall short of their vision of excellence in philanthropy.

Voluntary initiatives such as “Philanthropy’s Promise” are consistent with a free society under two conditions. First, it is important that the initiatives remain truly voluntary, without the threat of coercion from regulators, legislators, community activists, and/or mandatory accreditation systems. Second, it is important that donors and foundations remain free to give to the many worthy charitable objectives that are not included in the NCRP “promise.”

So long as they defend and respect the freedom of donors to make their own charitable decisions, it is consistent with philanthropic freedom for activist groups to criticize donors’ choices, and to seek to push giving in a different direction. But philanthropic freedom is at risk when activist groups use the threat of legislation to impose their own charitable preferences.